by Joe Rosengarten
Appraisal Institute of Canada (AIC) members perform approximately 1 million residential appraisals in Canada annually, reporting on residential property values totalling more than $500 billion. Residential sales have increased, and as the market continues to show signs of unpredictability a higher percentage of these sales are being appraised to determine values on which to base mortgage financing.
For brokers, partnering with a qualified AIC appraiser is a no-brainer, but how can brokers navigate the appraisal process in a way that helps their clients to secure the best mortgage?
- “Select an appraiser that specializes in the type of property you need valued,” says Dan Brewer, AACI, P.App, past-president of the Appraisal Institute of Canada (AIC). “Use the “property type” dropdown menu available on www.AICanada.ca/find-an-appraiser to select the property that you want appraised.”
- Share all the relevant details about the property with the appraiser to ensure that he/she fully understands the scope of the assignment. This will help to shorten the turnaround time of the appraisal.
- “Be clear about the use of the report,” Brewer says. “Different uses may require different approaches to determining value.”
- Ask the appraiser for a draft report if you are still securing a lender. A draft report could provide you or your lender with what you need to secure financing sooner. Once you have secured a lender, the draft report can be quickly finalized which can help to reduce delays in the mortgage-financing process.
- “Provide the appraiser with authorization from the original lender if you need to change lenders,” says says Keith Lancastle, CEO of the Appraisal Institute of Canada (AIC). “The appraiser has a duty of care and confidentiality to his/her client - the original lender - and will require authorization from this lender to re-direct the report to a second lender. If given authorization from the original lender, the appraiser may be able to quickly send you a reliance (sometimes referred to as a transmittal) letter for the second lender.”
- Make sure the appraisal report is not outdated. An appraisal is completed at a specific point in time. If it is an old report or there have been significant market changes since the report was written, ask the appraiser to provide an update or a new report.
- “Last and likely most importantly,” says Lancastle, “manage your borrower’s expectations with clear communication from the outset with regard to the appraisal report.”